Both Bitcoin and Ethereum experienced significant losses on Monday as the recent slump in the cryptocurrency market resumed, CNBC disclosed.
A sharp decrease saw Bitcoin shed 5.4% of its value, last valued at roughly $86,435 at 11:30 a.m. in London (6:30 a.m. ET). Furthermore, Ethereum fell by approximately 6.1% early in the trading day, descending to $2,843, according to CNBC.
Solana's value dropped by over 7%, trading near $127, and several other widely monitored tokens also showed losses, including Dogecoin, which slipped by about 8.6%.
Following a statement released Saturday by the People's Bank of China warning of illicit activities concerning digital currencies, Hong Kong-listed shares of companies involved in digital assets suffered a retreat during Monday's session, which amplified the pressure, as reported by CNBC.
A wider aversion to risk in the global markets at the start of the month is mirrored by this fresh erosion of digital asset values.
Ben Emons, the founder and Chief Investment Officer of Fedwatch Advisors, indicated that following the recent Bitcoin sell-off, individuals remain "nervous," adding that a $400 million exchange liquidation is widely believed to be the reason for Monday's price reversal.
Emons, speaking on CNBC's "Squawk Box Europe" Monday, highlighted the enormous leverage prevalent across Bitcoin exchanges, which reaches up to 200x in certain instances. With an estimated $787 billion in outstanding leverage within perpetual crypto futures, against the approximately $135 billion outstanding in ETFs, "you can do the math," Emons stated. He additionally cautioned that "There is still a lot of leverage in Bitcoin out there. We can expect to some more of these liquidations if Bitcoin prices don't get off the lows from here."
The Monday price dip transpired on the heels of a pronounced sell-off in October, which Emons noted also transferred to the stock market, with Bitcoin displaying a higher correlation with indices such as the Nasdaq. Citing the decentralized and opaque character of the asset class and crypto exchanges, he contended that "It's predominantly retail driven, that's the worrying part of it, because retail reacts very differently than institutional [investors]." The CNBC report concluded, "That is something to reckon with going forward from here, as more and more leverage is used in this space." Investor apprehension continues to be fueled by macroeconomic uncertainties – which include speculation about a possible US interest rate cut – while persistent questions over the inflated valuations of artificial intelligence-related stocks contributed to November's turbulent markets as crypto volatility grew.
